The Economic Stimulus Checks Are All Smoke and Mirrors…
August 13, 2008 by Kristen King
Filed under Business
(www.bizchicksrule.com) — …designed to distract the American public from the real issue. We’re spending money we don’t have because we’re financial morons, and the government things some balloons and smiley faces and sleight of hand will make us forget that fact and spontaneously solve all of our problems. I’m not buying it.
I made the following comment on Kelly’s post The Middle Class in America Isn’t Happy late last month, and in light of the ongoing discussion of a second economic stimulus package, it’s all the more relevant:
Maybe I’m just a little slow on the uptake, but I just do not see how another stimulus package, whether it’s on the horizon or not, could possibly be helpful. I don’t see how the first one was helpful. It’s like putting an Elmo Band-Aid on a compound fracture — it doesn’t even come close to solving the problem.
Back in January, House Speaker Nancy Pelosi, said, "Tens of millions Americans will have a check in the mail. It is there to strengthen the middle class, to create jobs and to turn this economy around." Well, Nance, your heart is in the right place and all, but people are losing their houses because they can’t pay their mortgage. They’re being evicted because they can’t pay their rent. Some folks can barely afford groceries. A check for $600 may get someone through the next month, but covering a few bills ain’t "turning the economy around," babe.
The numbers speak for themselves:
The prospects for a quick economic recovery dimmed Thursday [July 31, 2008], with new data showing the U.S. economy grew at a slower-than-expected rate this spring despite some oomph from tax rebate checks — and actually shrank late last year.
…Armed with government stimulus checks of up to $600 per person, Americans boosted spending on food, clothing and other items in the second quarter, the Commerce Department reported.
But the gross domestic product still increased at a 1.9 percent annual rate, up from 0.9 percent in the first quarter but less than the 2.4 percent economists were looking for.
…Meanwhile, the Labor Department said the number of newly laid-off people rose to 448,000 last week, the most in five years. More job cuts are expected in coming months, and Americans may cut back on spending, kindling recession fears. (source)
Need I go on? Well, yeah, I think I do need to, because as Bridget mentioned Monday, there’s a second stimulus package in the works, designed to increase consumer spending and further "turn the economy around." Isn’t that cute? The government of a country with more than $9 trillion in public debt thinks it has the means to help US citizens solve their enormous personal financial problems with a second $600 check. How quaint.
…[Commerce Secretary Carlos Gutierrez] conceded that growth is still weaker than the administration would prefer. But he said he’s hopeful the stimulus checks will continue to support spending in the second half of the year. [[Because there's anything left?????]] He dismissed calls by Democrats, including Democratic presidential candidate Obama, for a new stimulus package.
"This stimulus package is just barely starting," he said. "Let’s see how this works before we throw any more short-term money [at the economy.]"
…Despite Gutierrez’s optimism about the second half of this year, some economists, most notably Federal Reserve Chairman Ben Bernanke, have expressed worries that with those checks already cashed, spending and economic activity could slow even further. [[Gee, I could have told you that!]] (source)
Bridget hit the nail on the head in her post Is The Second Time Around Really A Charm? Another Stimulus Check Is On The Way…Maybe:
- "As a business owner who has been through a few tough financial crunches, I can tell you that spending MORE money isn’t always the answer to getting out of a mess." Amen, sister.
- "Stop spending any more additional money that YOU DO NOT HAVE starting today. If you don’t have it, don’t buy it. Doing that will only make your financial situation worse. Getting out of debt requires immediate action. Doesn’t always feel good. Doesn’t have to…it’s just right." Can I get another amen?
Stimulus package or not, the problem still exists: The vast majority of Americans are spendthrifts and our financial system preys on foolish, ignorant people who demand instant gratification and insist on constantly portraying a showy display of one’s means of life to feel adequate, much less good, about themselves.
We have central, foundational conceptual issues surrounding finances in this country that will not be resolved by merely throwing money at the problem, and in fact will only be made worse. When will the government figure that out? If current actions are any indication, my vote is "never." The solution is not to live with a giant bank account or huge credit limit, but to get a grip on out-of-control spending and learn to live with a simple eye. As Bridget said, it doesn’t always feel good. But neither does setting a broken bone or debriding dead, damaged, or infected tissue — and both of those things are necessary, too.
Something else spot-on that Bridget said: "Revamp current systems that are not working. If you keep trying over and over and over to do something a certain way and it’s just not working, stop it and try it a different way. Just think that maybe that original system was a dud to begin with."
It’s time for a change, and I don’t mean another stimulus check. I mean a fundamental change in how we view money, spending, and lifestyle. What do you think?
Contents © Copyright 2008 Kristen King
Tags: womens business blog, women in business, women and business, economic stimulus, stimulus check, stimulus package, gross domestic product, GDP, recession, slow economy, financial problems, national debt, public debt, spending, america, united states, nancy pelosi, kristen king, bridget wright, biz chicks rule
The only people thinking these economic stimulus checks were a great idea are the same people who think they’re getting a great deal because their 18% $49 annual fee credit card gives them 1% back.
The same people who fill out the class action lawsuit papers, follow each correspondence, then get a check for 49 cents.
I’d hate to know the admin cost of each of those stimulus checks.
It’s the same thing as the king throwing a handful of gold coins at the peasants in the fields. It was never meant to solve, only distract those easily blinded by a gold coin.
Amen to Kristen & Bridget
As a great mind once advised:
We cannot fix our problems with the same thinking we used when we created them.
Albert Einstein
Who is paying for the stimulus check? The taxpayers….in other words, we are. If we pay taxes, we pay for our own checks and those given to the people who never paid a whit into the tax fund. Then, if we were smart, we used the stimulus check to pay on mortgage, bills, credit cards, or put into savings, etc. instead of buying something new. It’s an election year ploy.
It’s like raising minimum wage. Sure, it sounds great, but now those employers who hire people at minimum wage have to raise their prices to cover the additional expense, which means now everything costs more. Another check will come at about the time my next self-employment taxes are due. Whoopie.
The best solution? Stop buying unnecessary things. I suspect that’s why we’ve seen The Sharper Image go out of business and now Starbucks closing stores. We’ve become spoiled by our own “needs” and blind to the fact that necessity isn’t in the form of a double-half-caf mochachino. I’m not picking on Starbucks so much as trying to illustrate where our money is going. $4 a cup times 5 times a week times 52 weeks….
I didn’t agree with the first economic stimulus check (disclosure: it didn’t stop me from using it to pay for my fence), and I certainly don’t agree with the second check.
Using borrowed money to encourage the American people to spend, spend, spend to “stimulate” the economy is the same as pulling out a credit card. Just like so many people right now, the government will, at some point, be unable to make interest payments on the huge debt. And soon we will fall behind.
It may be difficult, but the solution is to move away from an economy that is currently based on consumer spending and debt and back to one in which wise financial decisions provide the basis of a more stable and sustainable economy.